A question of ethics. - Posted by Andrew Smith (Phila)

Posted by Kristin on January 09, 1999 at 17:31:50:

just my two cents:
As long as both offers are from investors willing and able to follow through, I don’t see a problem. In my area, a lot of the realtors need a “wake up” call, and this sounds like a viable way to do it.
You might even want to consider making the lower offer the cash offer in some cases, and see if there is any difference in response time and acceptance rate.

A question of ethics. - Posted by Andrew Smith (Phila)

Posted by Andrew Smith (Phila) on January 09, 1999 at 17:20:13:

Once a month I have breakfast with several other investors. We have discussed how we all hate it when we make an offer only to have the agent involved tell us that another offer is coming in. We never know whether to believe it or not. Now we have developed an idea for a similar tactic of our own but I can’t help but wonder how ethical it is. While few situations are ever either black or white this is definetly gray. Here’s our idea. Lets say that a property that needs work is overpriced and has been on the market for a long time. We have considered coordinating two offers coming in within a day of each other through different agents. Both offers would be substantially under the unrealistic asking price but one offer would be several thousand higher than the other. The higher of the two offers would also be a cash offer. For example lets say that we would coordinate offers of $64,000 and $71,000 on a property that is grossly overpriced at $129,000. The idea behind this technique would be too wake the seller and the listing agent up by the power of suggestion and to possibly have the higher offer accepted. Although we would not be twisting anyones arm we would be creating a perception of value based on two supposedly independent and unbiased buyers individual opinions of what they would be willing to pay. The seller’s agent would be completely free to recommend that the seller not accept either offer and no matter what the agent recommends, the seller would be free to make their own decision. I know that this is definetly a gray area issue and I will make my own decision of what I will do but I would be interested in what other experienced investors think of the idea and of the ethical question involved.

Re: A question of ethics. - Posted by Laure

Posted by Laure on January 09, 1999 at 21:29:17:

Nothing wrong with this idea. Go for it ! I have made double offers myself. One all cash, and one with financing.

On a purchase last month, the seller took the offer with financing… (I was certain she would go for the cash because the last buyer didn’t get their financing.) then called me and begged to close sooner. I said, if you want to take the lower cash offer, we can close tomorrow !.. she waited for the financing… hehehe … sometimes you win, sometimes you lose. I still got a heck of a deal on the house.

Laure :slight_smile:

Re: A question of logistics… - Posted by Russ Sims

Posted by Russ Sims on January 09, 1999 at 20:46:25:

How can one buyer make two offers (even through different agents) without the seller knowing it’s from the same person? Aren’t you required to put all personal info on the purchase agreement? Am I overlooking something obvious?

Re: A question of ethics. Good idea! - Posted by Doug Jones

Posted by Doug Jones on January 09, 1999 at 19:17:08:

I was thinking the same thing awhile back! You know good and well that the power of suggestion is very real!

Why would the prices on clothing or many other items
at some stores be consistently marked at 40% off!!

I heard of a real estate guy in the Fort Myers Fl
area that noticed the price waterfront property to be selling lower than surrounding towns. So he bought up
a lot of pieces. Then started listing his property at high prices. Since he had quite a few properties and with the help of a local newspaper guy, the word got out to all the other sellers in the area, to raise the prices since they were selling too low!
In a year he had almost doubled his money…

Try it and report back

DJ in Tampa

Re: A question of ethics. - Posted by phil fernandez

Posted by phil fernandez on January 09, 1999 at 17:59:59:


I see nothing wrong with your two offer approach. In fact I find the idea very creative in that you are trying to get one offer accepted through the use of the second lower offer. There is no law against making offers. Your two offer concept is no different than if you yourself made two offers on the same property. One all cash and a second offer containing terms.

The seller still has the right to reject both offers or counter or accept one of them. Good idea.